First, we’re looking at pieces of legislation with no cost containment. There is no bending the curve, as Doug [Holtz-Eakin] indicated, in these pieces of legislation. I have a hunch that members of Congress, as they’re thinking about constructing proposals, are going to come back to that curve bending discussion, as you indicated in your opening remarks and I think that’s going to be very important.

Ignagni is right to argue that Congress should strengthen the individual mandate requirement, but her central claim is demonstratively false. In fact, many economists believe that the very policy measures she opposes would bend the cost curve downward.

As Christina Romer explained this morning during a speech at the Center for American Progress, the excise tax on high cost plans “will discourage insurance companies from offering high-priced plans that would otherwise eat up larger and larger shares of workers’ wages. A policy such as this is probably the number one item that health economists across the ideological spectrum believe is likely to stem the explosion of health care costs.”

Secondly, the Senate Finance Committee’s bill (along with the House legislation) goes a long way towards “reining in costs” and controlling spending (over the long term and the short term). It restructures payments to Medicare Advantage plans (to base payments on plan bids with bonus payments), establishes an independent Medicare Commission to submit proposals for reducing excess Medicare cost growth by targeted amounts, reduces Medicare DSH payments by an amount proportional to the percentage point decrease in the uninsured, reduces payments for preventable hospital readmissions in Medicare, and establishes a hospital value-based purchasing program in Medicare to pay hospitals based on performance on quality measures. The House and Senate Finance bills also invest in critical delivery system reforms.

Ignagni is dismissing cost containment policies that undermine insurer profits and pretending that the industry is not at least partly responsible for the trend in spending. But just because she refuses to see them, doesn’t’ mean they don’t exist.

Transcript:

First, we’re looking at pieces of legislation with no cost containment. There is no bending the curve, as Doug [Holtz-Eakin] indicated, in these pieces of legislation. I have a hunch that members of Congress, as they’re thinking about constructing proposals, are going to come back to that curve bending discussion, as you indicated in your opening remarks and I think that’s going to be very important.

Second, we’re looking at additional fees and taxes on insurers, on pharmaceutical companies, on device manufacturers, all being added to the cost of coverage and the cost of products in the health care system. So two things, two missed opportunities, and two specific policy decisions that are bending the cost up. And then we get to the issue that if we don’t have everyone participate, who are the people who are not going to participate? And I can tell you that looking at the actuarial studies, if you have 30% of people who don’t participate, 20% or even 10, you are basically consigning the people who have made the decision to participate to pay more and significantly more. All of those things interact in a way that if our objective is to say, if you like your coverage you can keep it, and I think as part of that people believe that they wouldn’t be asked to pay more for it, we are moving in the wrong direction.